Budget 2023-24: India Inc to gain from Rs 10-trillion infra push

CEOs expect big orders from govt as private capex picks up in tandem

With the Indian government increasing its infrastructure budget to Rs 10 trillion, apart from making additional expenditure on green transition, top Indian companies led by Larsen & Toubro, Siemens, Thermax, HCC, and the Tatas can expect a surge in their order book. Government-led capex in infrastructure will lead to private sector companies increasing capacity to meet demand, CEOs said.

CEOs said as their capacity utilisation was slowly inching up above the 75 per cent level, they will have to increase their capacity to meet the growing demand from the railways, roads, and infrastructure sectors.

“We expect demand to pick up as the government rolls out mega infrastructure projects. This (infra push) will lead to a surge in demand for steel, cement, railway wagons, auto products like trucks and tractors,” said the CEO of a large firm.

Experts said the increase in budgeted capex of over 30 per cent comes as a pleasant surprise as it comes on the back of a Rs 7.5-trillion outlay in last year’s Budget, which itself was 35 per cent higher than previous year, thus leading to a multiplier effect.

The government is focusing on the high GDP multiplier effects of infrastructure spending, which constitutes a major part of this capex. With states accounting for 20-25 per cent of the overall infrastructure spend, the Budget has also considered an increase of over 30 per cent in allocation to the scheme for special assistance to states for capital investment.

“What seems to be missing is any kind of incentivisation for private sector investments in infrastructure in the form of credit guarantee schemes for public-private partnership projects or a national platform for asset backed securities, which have worked well in other countries,” said Arindam Guha, a partner of consultancy firm, Deloitte India.

CEOs are also looking forward to the energy transition segment. “The Rs 35,000-crore allocation for energy transition, along with an ambitious target of 5 MMT of hydrogen, will unleash new demand impulses across the length and breadth of the country, thereby fielding green growth. This has been complemented by a custom duty and tax reliefs for green mobility,” said Prashant Ruia, director, Essar group, which plans to invest Rs 50,000 crore in hydrogen projects.

Harsh Goenka, chairman, RPG group, said the Budget put India on the path to becoming the world champion, all set to score goals on infrastructure development, consumption and inclusion. "A big boost for domestic manufacturing, job creation and ease of doing business,” he said.

Among Indian companies, the Tatas plan to invest $90 billion in the next five years for semiconductors, mobile manufacturing and electronics. Tata Projects and Tata Motors will benefit from infrastructure push. The Adani group plans to invest a massive $107 billion by 2030, and Reliance Industries has announced plans to invest $76 billion towards clean energy projects. Vedanta group is planning to invest $20 billion to manufacture semiconductors in association with Foxconn of Taiwan in Gujarat. The Aditya Birla group also announced plans to enter the green energy segment.

Vivek Lohia, managing director, Jupiter Wagons Group, said the higher budget highlights the importance of investments in high-quality infrastructure for accelerating economic growth. “‘I believe that with a capital outlay of Rs 2.4 trillion for the railway, there will be a dynamic change in strengthening the infrastructure of the entire railway system,” he said.